Egypt curtails wheat buying as offer prices tick higher

Gasc, at its fourth tender of the season, slowed its buying to just one cargo after most merchants nudged higher their offer prices, on contrast to weakness on futures markets.

Gasc, the grain authority for Egypt, the world’s top wheat-importing country, purchased 60,000 tonnes of Russian supplies on Tuesday from Midgulf, the first time since February that only one cargo was bought.

The slowdown from the previous three events, over which Gasc purchased a total of 600,000 tonnes of wheat, came amid a rise in offer prices, excluding freight, among many of the nine merchants who tendered this time.

Archer Daniels Midland, which won a 120,000-tonne wheat order at the last event, last Thursday, lifted its prices by up to $4.60 a tonne.

Midgulf was alone in cutting the price of Russian wheat, by $1 a tonne from last time to $168.90 a tonne, excluding freight.

French woes

The upward pressure on merchants’ prices contrasts with a drop in values in Chicago, the benchmark futures exchange, where spot September futures have fallen by some 2% since, coming close on Tuesday to dropping below $4 a bushel for the first time in a decade.
Gasc wheat purchase at tender, August 2

60,000 tonnes of Russian wheat from Midgulf at $168.90 a tonne, plus $8.19 a tonne freight

However, values in the former Soviet Union and European Union, the primary origins for Gasc purchases, have felt upward pressure from the poor harvest in France, the EU’s top wheat producing and exporting country.
Consultancy ODA on Monday cut its forecast for the French crop to a 28-year low of 28.2m tonnes, well below the more than 40m tonnes achieved last year with worries over the quality of much of what has been harvested.

‘Disease pressure very strong’

Rival Agritel said that the harvest could be the “worst” in 40 years, saying that “French producers are traumatised by the 2016 harvest, probably the worst since 1976”.

Persistent wetness in May and June has led to “seed abortion, photosynthesis blocking and bad grains filling.

“To crown it all, disease pressure is very strong,” Agritel said, with wet weather making it hard for farmers to apply pesticides, besides encouraging the spread of many insects and diseases.

No French wheat was offered to the Gasc tender.

‘Quality and quantity’

The poor results in the EU, the top wheat exporter, have provided upward pressure on prices in rival origins in the Black Sea, a region where farmers are enjoying a strong harvest – indeed one which typically might be expected to weigh on values.

Analysis group Ikar on Monday estimated the price of wheat with 12.5% protein at $164 a tonne, excluding freight, up $2.50 a tonne week on week.

“First and foremost this is to do with the quality and quantity of the western European crop,” the group said.

SovEcon quoted the free-on-board (FOB) wheat prices in the Black Sea area at $164.50 per tonne, a rise of $1.50 week on week.

‘Maintain stress’

However, there are mounting concerns that the dry weather which is allowing an easy Black Sea harvest may be providing less-than-ideal growing conditions for autumn crops such as corn.

Disappointing production of corn would also tend to boost prices of wheat, in forcing livestock producers to switch grains in feed rations.

Weather service MDA said that “dryness remains extensive across south central Ukraine and Volga Valley”.

“Light showers should return” to these areas this week, “but the rains will likely remain too light to significantly improve moisture.

“This will maintain stress on corn and sunflowers.”

In Minneapolis, broker Benson Quinn Commodities said that “concerns about dryness for portions of the European Union and Black Sea corn crops are increasing.